Supreme Court to Weigh Tactic Used to Combat Housing Bias

The Associated PressThe court tried to tackle the issue of disparate impact twice before, but those cases were settled out of court.By Sam Hananel

WASHINGTON -- For the third time in recent years, the Supreme Court will consider taking away a powerful legal tactic the Obama administration and others have used to combat housing discrimination.

The justices agreed Thursday to take up a Texas case that challenges the theory that certain housing or lending practices can illegally harm minority groups, even when there is no proof of intent to discriminate. The court tried to tackle the issue twice before, but those cases were settled out of court in 2012 and 2013, just weeks before oral argument.

Those settlements, including one brokered by the Justice Department, cheered civil rights groups that hoped to avoid a setback from court conservatives. But the agreements disappointed banks and mortgage companies that believe federal housing laws should punish only intentional acts of discrimination.

The legal theory is known as disparate impact. It allows the government or private plaintiffs to use statistics to show that seemingly race-neutral policies disproportionately harm racial minorities.
While this tactic routinely has been used in employment discrimination cases, it is not explicitly covered under the Fair Housing Act.

In the Texas case, a fair housing group claims the state's system for distributing low-income housing tax credits discriminated against racial minorities. A federal appeals court agreed that the group could use statistics to show the state was approving more low-income housing in black neighborhoods than in white areas. Fair housing advocates say such policies perpetuate segregated neighborhoods.

The Texas Department of Housing and Community Affairs argues that allowing disparate impact claims would open nearly two dozen housing programs in the state to potential litigation. The agency said it essentially forces officials to seek out race-neutral results without actually taking race into account.
"Until Texas achieves racial symmetry in all aspects of government decision-making, operating any one of those programs exposes the state to a potential disparate impact lawsuit," the state said in its brief to the court.

Disparate impact has been around for more than 40 years, since the Supreme Court first upheld use of the doctrine in 1971 for employment discrimination cases. But it has increasingly emerged as a centerpiece of the Justice Department's effort to crack down on illegal housing practices.

The government has won hundreds of millions of dollars in legal settlements from financial companies accused of discriminating against black and Hispanic customers by charging them higher fees, steering them into higher-risk mortgages and committing other violations.

The justices first took on the housing issue in a 2011 Minnesota case questioning whether the city of St. Paul's aggressive enforcement of housing code violations in low-income properties disproportionately affected black residents. But Justice Department lawyer Thomas Perez, now the labor secretary, persuaded the city to drop its appeal because an adverse ruling would have hurt the agency's approach to housing discrimination cases.

Last year, the court agreed to hear a case from New Jersey in which residents of a mostly black and Hispanic neighborhood sued the township of Mount Holly over a redevelopment plan that would have forced them to move. A last-minute settlement, smoothed in part by civil rights groups, resulted in the case being dismissed.

The court will hear arguments next year in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., 13-1371.